- Sole Proprietorship
Sole Proprietorship Firm Registration
An individual carrying out a business activity under his name is termed as a sole proprietorship firm. Since there is no specific act to regulate this type of entity it is advisable to get it registered under the Goods and Service Tax Act and Shop and establishments Act.
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What is a Sole Proprietorship Firm?
An individual carrying out business activities is the sole proprietor and its business entity is said to be a Proprietorship Firm. Most businesses in India start individually without other’s participation. The personality of an individual and the business are not quite the same as one another. But due to the lower tax rate, flexibility and multiple advantages people prefer this structure for the early stage of business.
Benefits of Proprietorship Firm Registration
Tax Benefits
Proprietorship business is not treated separately in for income tax purpose. The tax slab as specified for an individual’s income is only applicable to the income of the business. The rates of tax are lower compared to other business structure like company and partnership. The benefit of deductions is an added advantage with combined ITR for individual and the business.
Easy To Establish
It is relatively easy to establish and register the sole proprietorship business. There is no specific process to be followed to setup this business. Also the cost of sole proprietorship registration is very less compared to any other business structure. The business runs on the identity of the proprietor himself. He can run any legal business in his own name or with a different legal name as brand.
You Own Whole Share Of Profit
The proprietor is only owner of the business and therefore he owns the whole share of the business profit. Also, the business assets are treated as assets of the proprietor and vice-versa. He can decide when to withdraw profit or to reserve.
Here how it works
Sole Proprietorship Firm
Most businesses in India start individually without other’s participation. An individual carrying out business activities is the sole proprietor and its business entity is said to be a Proprietorship Firm. The identity of an individual and the business are not different from each other. But due to the lower tax rate, flexibility and multiple advantages people prefer this structure for the early stage of business.
- FAQS
Have Questions? Find Answers Here
The Proprietor must be an Indian citizen and a Resident of India. There is no approval required prior to the commencement of business. But, Non-Resident Indians (NRI) and Persons of Indian Origin can invest or start sole their proprietorship business only with prior approval of the Government of India.
Anyone in India having a valid PAN, is eligible to start a sole proprietorship business with or without registration (depending on the business type) provided, a bank current account is made available to make business transactions. Sometimes, Banks may require GST registration and Shops & establishments registration to open a current account with them.
Most of the local business who start business ad proprietor are small traders, manufacturers, and other small scale shop vendors.
It involves additional efforts and time to convert sole-proprietorship to other legal entity. However, taxkriya team will support and guide you in easy conversion to another legal entity.
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